Thursday 25 March 2010 18.17 EDT
First published on Thursday 25 March 2010 18.17 EDT

Hopes that Google's forthright stand on censorship in China would inspire other companies to follow suit appeared unfounded today, with the move instead threatening to widen the rift between some of the world's most powerful internet companies.

Microsoft, which has considerable interests in the country, including its Bing search engine, responded directly to criticism by Google's co-founder Sergey Brin, who this week accused the company of speaking against human rights and free speech.

Brin, who pressed for the closing down of Google's self-censored Chinese search engine, said yesterday: "I'm very disappointed for them in particular.

"I would hope that larger companies would not put profit ahead of all else. Generally, companies should pay attention to how and where their products are used."

Microsoft rejected Brin's critique, saying it would continue to obey local laws on censorship in China.

"We appreciate that different companies may make different decisions based on their own experiences and views," a spokesman said. "We have done business in China for more than 20 years and we intend to continue our business there."

The company said it regularly talked to governments all over the world about the benefits of free speech, including the authorities in Beijing, but added that "engagement in global markets is important".

"We believe all technology companies should make public commitments to help protect internet users."

The comments come days after Google closed its Chinese search engine and moved operations to Hong Kong, which lies outside China's Great Firewall, which blocks access to some sites. That move, prompted by a hacking attack on Google's servers that has been traced back to China, is the latest attempt in the company's campaign to challenge Beijing's internet censorship.

Brin, in particular, has tried to rally the US government and other businesses behind the cause, arguing that censorship is an unfair restriction on human rights and information.

Most big internet corporations with business interests in China, including household names such as Yahoo and MySpace, are following Microsoft's lead.

However there are some exceptions.

GoDaddy.com, the world's largest internet domain registrar, told a US congressional hearing that it will pull out of China because of concerns over government interference and privacy. The company, which says it manages 27,000 Chinese domain names, said the authorities there had asked it to collect photo headshots, business licence information and signed registration forms from customers and forward them to government officials.

"The intent of the new procedures appeared … to be based on a desire by the Chinese authorities to exercise increased control over the subject matter of domain name registrations by Chinese nationals," GoDaddy's executive vice-president, Christine Jones, told the hearing.

"There appears to be a recent increase in China's surveillance and monitoring of the internet activities of its citizens."

Some other technology companies have chosen not to enter the Chinese market, echoing the arguments made by human rights activists who said that Google should never have agreed to self-censor its search engine in 2006. Among the biggest hold-outs is Facebook, which has more than 400 million users worldwide but remains blocked by the Great Firewall. The site runs a Chinese-language version but has so far refused to set up an operation inside the country, not least because it holds a vast treasury of personal information and private conversations belonging to its users.

Twitter, the social networking startup that was lauded for helping activists spread information during anti-government protests in Iran, has also indicated that it does not intend to give any element of control to the Chinese government.

Evan Williams, Twitter's co-founder and chief executive, recently said that the service, which has a significant number of users in China, but is also blocked by the authorities, wanted to be a "force for good".

"My hope is that eventually the open exchange of information will prevail in most regions, but we don't have any specific plans in China or other areas where we're blocked."

Internet analysts played down the significance of GoDaddy's move, pointing out that .cn domains made up less than 1% of the company's business and that many people were simply unwilling to register under the rules.

"It is essentially a dead business," said a Beijing-based technology pundit, Kaiser Kuo.

Journalist Michael Anti made headlines around the world when Microsoft closed his Chinese-language blog in 2005. But he said: "Microsoft has done a lot of good things for Chinese people – MSN [hosted outside the mainland] has expanded civil society. It certainly shouldn't be the first to be blamed.

He added: "Google is not an internet company; it's the internet company."

Others pointed out that the Global Network Initiative, founded a year and a half ago to encourage technology companies to adopt and implement human rights standards in their dealings with authoritarian regimes, included both Microsoft and Google.

"Only three companies – Yahoo, Microsoft and Google – have embraced meaningful human rights standards, and even among them there are differences in their approach to China," said Arvind Ganesan, business and human rights director for Human Rights Watch.

"There are many more companies that haven't said anything and are just as much obliged to respect human rights. That really speaks to the need for some kind of regulation."

Blogger Isaac Mao said Google had set a good example which he hoped others would follow.

"Of course many companies want to do business in China, but we really think western nations should apply the same kind of moral standards they do in their own nations."

Faced with the growing conflict between American internet firms and Beijing, the US government appears to have stepped back from its wholehearted support of Google, with the Obama administration instead taking a "lie low" approach, according to James Lewis, a senior fellow in the technology and public policy programme at the Centre for Strategic and International Studies.

Legislation pending since last May would deter American businesses from co-operating with online censorship efforts and encourage a diplomatic push for internet freedom, but Congress has taken no action on it and observers do not expects it to reach the statute books in the near future.

Corinna-Barbara Francis, Amnesty International's China researcher, said she hoped that a greater awareness among consumers would start having an impact on the decisions made by businesses eyeing the lucrative Chinese market.

"There is no question that adopting social responsibility policies – at least in the West – is good for your image and good for business.

"People may want their jeans manufacturers to be ethical, but it's even more personal when it's the company that provides your blog or social networking. People don't want to be doing all those things with companies they don't feel good about."

But Andrew Lih, an expert on technology in China and director of new media at the University of Southern California Annenberg, said: "Americans rarely even engage in boycotting of US-based entities they know have done far worse things. I doubt the actions in China are going to energize them."

Meanwhile Beijing argues that all governments place limits on internet content. It denies any connection to cyber-attacks and says it is regularly targeted by hackers.

The companies: What they do in China

Microsoft After being criticised when it censored blogs hosted on its MSN service, Microsoft made careful changes to its policies. For example, its Hotmail email service does not keep any data in mainland China. However, the company continues to self-censor other aspects of its service, and its co-founder, Bill Gates, surprised observers recently by saying that Chinese censorship was "very limited".

MySpace Rupert Murdoch's News Corporation holds significant interests in the country, not least MySpace China, begun in 2007. The site, which is locally owned, operated and managed, is notorious for censoring users who talk about politics or religion.

Yahoo After a huge privacy backlash when the company handed over personal information that led to the jailing of a Chinese journalist, Yahoo scaled back its involvement in the country. In 2005, it exchanged its Chinese arm for a 39% share of the popular website Alibaba. "We no longer have operational control or day-to-day management over the Yahoo China business," said the company.

Cisco Systems The California-based networking company is one of the biggest targets for activists because it supplies technology and training that is used to run the Great Firewall. It remains relatively unrepentant. The company's chief executive officer recently said that he would invest hundreds of millions of dollars in building up the Chinese business, and claimed that Google's protests were part of a "natural give and take".